Question

Problem 22-2A Manufacturing: Cash budget LO P2

[The following information applies to the questions displayed below.]

Built-Tight is preparing its master budget for the quarter ended September 30, 2017. Budgeted sales and cash payments for product costs for the quarter follow:

	July			August			September
Budgeted sales	$	60,500		$	76,500		$	51,500
Budgeted cash payments for
Direct materials		16,860			14,140			14,460
Direct labor		4,740			4,060			4,140
Factory overhead		20,900			17,500			17,900

Sales are 30% cash and 70% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,700 in accounts receivable; $5,200 in accounts payable; and a $5,700 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,700 per month), and rent ($7,200 per month).

Problem 22-2A Part 2

(2) Prepare a cash budget for each of the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.)

Answer 1

	Cash reciepts budget
	For July ,August ,September
				July	August	September
Sales				60,500	76,500	51,500
less:Ending accounts receivable				42350	53550	36050
Cash receipts from:
Cash sales				18150	22950	15450
collections from prior month's receivables				45,700	42350	53550
total cash receipts				63850	65300	69000
Cash budget
				July	August	September
Beginning cash balance				15,000	15,000	22,669
Cash receipts from customers				63850	65300	69000
Total cash available				78,850	80300	91669
Cash payments for:
Direct Materials				16,860	14,140	14,460
Direct Labor				4,740	4,060	4,140
Overhead				20,900	17,500	17,900
Sales Commissions				6050	7650	5150
Office salaries				4,700	4,700	4,700
Rent				7,200	7,200	7,200
interest on bank loan				57	24	0
total cash payments				60,507	55,274	53,550
Preliminary cash balance				18,343	25,026	38,119
Addittional loan ( loan repayment)				3,343	-2,357	0
Ending cash balance				15,000	22,669	38,119
loan Balance
				July	August	September
Loan Balance -Beginning of month				5,700	2,357	0
Addittional loan (loan repayment)				-3,343	-2,357	0
loan balance-end of month				2,357	0	0